The impact of exchange rate volatility on South African exports

Abstract

Exchange rates have been highly volatile in South Africa especially after the end of the Bretton Woods system and this has raised a lot of debate amongst interested parties in South Africa such as the South African government and the Congress of South African Trade Union. Therefore, this paper investigates the impact of exchange rate volatility on aggregate South African exports flows to the rest of the world for the period 2000 to 2009. The results obtained suggest that, there exist no statistically significant relationship that is there is an ambiguous relationship between South African exports flows and exchange rate volatility. Although the results were not robust, at the same the study found some sensitivity of South African exports to movements of the exchange rate. We find that, depending on the measure of volatility used, exchange rate volatility either does not have a significant impact on South Africa's exports flows, or it has a positive impact on aggregate goods and services.